Why are most futures positions closed out through a reversing trade instead of held to delivery?
In forward markets, about 90 percent of all contracts that are primarily established result in the short making delivery to the long of the asset underlying the contract. It is natural since the terms of forward contracts are tailor made among the long and short. By contrast, only about one percent of currency futures contracts result in delivery. Whilst futures contracts are useful for speculation & hedging, their standardized delivery dates make them unlikely to correspond to the real future dates while foreign exchange transactions will occur. Therefore, they are generally closed out in a reversing trade. Actually, the commission that buyers & sellers pay to transact in the futures market is a single amount which covers the round-trip transactions of initiating & closing out the position.